Nontraded REITs are Being Valued

NNN Lease Market News

Chief Executive Terry Roussel said in a shareholder letter last month that the value of the stock had to be reduced based on falling values of the industrial parks the REIT purchased at the height of the market. 

Financial advisers have touted the prospect of profiting from real estate without the volatility of publicly traded REITs. They also have pointed to steady dividend payments of up to 7%, according to some financial advisers, investors and marketing material.

Until recently, most of these REITs performed as advertised. Dividend payments continued, and quarterly statements showed that the values of the REIT shares mostly stayed steady from the prices at which they were originally sold, even as the downturn clobbered the public REIT market.

But unlike publicly traded stocks, whose values are set in the marketplace, valuation methods for nontraded REITs have varied widely.

Given that many nontraded REITs were established six or seven years ago, they will need to get properties in line with current market values when they sell the assets or take the companies public.

The average returns for all equity REITs, as well as all individual REIT sectors, were collected

from the official website of the National Association of Real Estate Investment Trusts (NAREIT),

the worldwide representative voice for REITs and publicly traded real estate companies with an

interest in U.S. real estate and capital markets.

http://online.wsj.com

Houston's Texas Profitable Market

NNN Lease Market News

Last year, Houston recorded 18,366 housing starts, the most of any U.S. market followed by Metrostudy but still way below its peak of 48,000 starts in 2006. Demand for new homes in the Houston area is strengthening, and more than 20,000 new-home starts are expected this year, according to Metrostudy.

Weyerhaeuser's strategy makes particular sense in a state like Texas, where it is relatively easy to get entitlements to build on land. It makes less sense to hold such large tracts, said Paul C. Quinn, an analyst with RBC Capital Markets.

Tricon joined with Johnson Development Corp., a Houston land developer, and an unnamed Canadian institution to buy Cross Creek. Glenn Watchorn, Tricon's chief operating officer, said the master-planned community was attractive partly because of the amenities and infrastructure that Weyerhaeuser has already added.

"If you believe the housing market has bottomed out, there's probably no better place than land," said Mr. Watchorn.

http://online.wsj.com

NNN Lease Economic Report

NNN Lease Market News

How does employment growth impact net lease activity? Or is that question even relevant to the space at all? If you were to substitute “office” for “net lease” in that sentence, the answers would be clear and immediate: “significantly” and “definitely yes”, for starters. Then would follow any number of calculations designed to show the relationship between this particular macroeconomic metric employment and office leasing activity.

There is no comparable body of research for the net lease space, however. Now two companies locally based Calkain Cos., and New York based Chandan Economics are partnering to produce research in the net lease space. The companies, headed by Jonathan Hipp and Sam Chandan, respectively, plan to launch a quarterly publication starting in the next 30 to 60 days. Initially, the publication, called Net Lease Economic Report, will be available for free to its clients. The goal will be to analyze the impact and relationship between tenant, developer and investor demand for net lease assets as well as establish relationships with broader economic trends.

“This subset of commercial real estate has been growing for the past two years and attracting new investor interest,” Chandan tells GlobeSt.com. “There is a need for much more rigor behind the research and understanding of the investment.”

The last two years have indeed attracted new levels and types of investors, Hipp tells GlobeSt.com, primarily a combination of institutional and private market investor. “The net lease investment profile can be very appealing especially when there is a lack of predictability and enhanced risk around commercial real estate in general.” Net lease’s stability is one reason why it has been attracting growing levels of investment, Hipp adds.

“That flight to safety that happened after 2008 and 2009 and has continued to make the net lease an asset class highly sought after and highly attractive to investors.”

About Calkain: Calkain Companies where triple netlease properties are the focus of our business. Working through the net lease investment process with our clients is the basis and foundation of our firm. We are America’s Net Lease Company!

www.calkain.com

McDonald’s is taking Net Lease Market Up-to-date

NNN Lease Market news

McDonald’s Corp. (MCD), the world’s largest restaurant chain, reported a 4.8 percent gain in first- quarter profit as new menu items such as Chicken McBites attracted U.S. consumers.

Net income advanced to $1.27 billion, or $1.23 a share, from $1.21 billion, or $1.15, a year earlier, the Oak Brook, Illinois-based company said today in a statement. Analysts projected$1.23, the average of 26 estimates compiled by Bloomberg.

“McDonald’s is taking market share just because their restaurants are more up-to-date, more modern and cleaner” than competitors, Peter Saleh, an analyst at Telsey Advisory Group in New York, said in an interview. McCafe beverages, which are a “growing category,” are also helping boost sales, he said.

The shares climbed 1.8 percent to $97 at 9:37 a.m. in New York, after rising as much as 2 percent for the biggest intraday gain since Nov. 30. McDonald’s had declined 5 percent this year before today.